Micro-hybrids to Grow to 39 Million Vehicles in 2017, Creating a $6.9 Billion Battery Market

Lux Research

Driven by stricter emission standards and fuel savings, micro- and mild-hybrids are emerging as a near-term alternative to pure hybrids and electric vehicles, says Lux Research.

Boston, MA – January 31, 2012 – Micro-hybrids will grow nearly eight-fold to 39 million vehicles in 2017 and create a $6.9 billion market for energy storage devices as the fuel-saving alternative technology finds ready adoption, driven by stricter emission standards, according to a Lux Research report titled, “Every Last Drop: Micro- And Mild Hybrids Drive a Huge Market for Fuel-Efficient Vehicles.”

Micro-hybrids, which use a small battery to provide varying degrees of efficiency-boosting features, will dominate the automotive market, gaining 42% of the overall light-duty vehicle market. Simultaneously, the mild hybrids — superior to micro-hybrids but not as efficient as pure hybrids — will rise from near-zero to 1.5 million vehicles in 2017, accounting for 1.6% of the auto market.

“Micro-hybrids will take over the automotive market, while mild hybrids will leverage the excessive build-out of Li-ion capacity to grow,” said Kevin See, Lux Research Analyst and lead author of the report. “Micro-hybrids and, to a lesser extent, mild hybrids, provide a cost-effective solution to fuel savings to bridge the gap to more disruptive technologies like alternative fuels,  plug-in vehicles, and fuel cell vehicles.”

To estimate adoption rates for micro-hybrids and mild hybrids, Lux researchers factored in the adoption of other fuel-saving technologies and modeled cost impact variations, besides estimating the costs of battery replacement and maintenance for these alternative vehicles. Among their conclusions:

  • Europe will lead with China and the U.S. in tow. Europe will continue its leadership in the micro-hybrid market, growing over three-fold to 12.6 million units in the next five years. China will see explosive 81% annual growth to reach 8.9 million units in 2017 and the U.S. will zoom from miniscule levels today to over 8 million in 2017.

  • Medium micro-hybrids dominate. A low price premium, fuel savings of up to 10% and a relatively easier manufacturing process will propel medium micro-hybrids to the top of the alternative auto market over the next five years. These vehicles will grow at 36% CAGR to 22.2 million vehicles in 2017, driven largely by the European market and automakers like Volkswagen.

  • AGM battery technology will grow nine-fold. Absorbed glass mat (AGM), lead-acid batteries will dominate the market for storage of micro-hybrids, growing at 46% annually to nearly $4 billion in 2017. In mild hybrids, Li-ion will carve out a niche, growing from near-zero to nearly $570 million in 2017, capturing a 47% market share among plug-in vehicles.

The report, titled “Every Last Drop: Micro- And Mild Hybrids Drive a Huge Market for Fuel-Efficient Vehicles,” is part of the Lux Research Electric Vehicles Intelligence service.